The Australian dollar has drifted a bit lower during the trading session on Tuesday, as the psychologically important 0.80 level continues to make a lot of noise. This pullback is to be expected though, because this level goes back in its importance to at least the early 1980s.
The Australian dollar has fallen a bit during the trading session on Monday, reaching down towards the 0.7950 level. I would anticipate some type of bounce on short-term charts, as we continue to consolidate below a major level. If we can break above the 0.80 level, the market should feel free to go much higher, perhaps into a “buy-and-hold” attitude. If we can break above the 0.81 level, I would not only be buy-and-hold, but I would also be aggressive.
Typically, this pair needs the gold market break out to the upside direction as well to solidify the move, and I think that is going to continue to be the case. Gold markets are drifting a bit sideways, so that might hurt this market in the short term. However, I see so much in the way of support underneath that I feel it’s only a matter of time before the buyers push to the upside yet again.
If we did breakdown, I anticipate that the 0.78 level will be a major place of contention, and any short-term selling opportunity will be stymied at that level. If we break down below there, that could crush the entire trend, but I think that is very unlikely to happen, and presently rate that at about a 10% probability. There will be a lot of volatility, but I think we are trying to build a nice-looking base to go much higher. Remember, the market should go higher eventually, but it needs to coincide with gold.
Being FXEmpire’s analyst since the early days of the website, Chris has over 20 years of experience across various markets and assets – currencies, indices, and commodities. He is a proprietary trader as well trading institutional accounts.